What are the most common mistakes businesses make when calculating ROI for property management systems?

1 Mistake 1: Not defining the scope and objectives of the PMS

One of the first steps to calculate ROI for PMS is to define the scope and objectives of the project. What are the specific problems that the PMS will solve? What are the expected benefits and outcomes? How will the PMS align with the overall business strategy and vision? These questions are essential to establish the baseline, the target, and the criteria for measuring the success of the PMS. Without a clear scope and objectives, the ROI calculation will be vague, unrealistic, or irrelevant.

2 Mistake 2: Not considering the total cost of ownership

Another common mistake is to focus only on the initial cost of acquiring and installing the PMS, and ignore the ongoing costs of maintaining, upgrading, and supporting the system. The total cost of ownership (TCO) is a more comprehensive and accurate measure of the investment required for a PMS. It includes direct costs, such as hardware, software, licenses, training, and implementation, as well as indirect costs, such as downtime, security, compatibility, and integration. By considering the TCO, businesses can avoid underestimating the investment or overestimating the savings of the PMS.

3 Mistake 3: Not accounting for the intangible benefits

A PMS can provide not only tangible benefits, such as increased revenue, reduced costs, or improved efficiency, but also intangible benefits, such as enhanced reputation, customer loyalty, or employee satisfaction. These benefits are harder to quantify, but they can have a significant impact on the long-term value and competitiveness of the business. Therefore, when calculating ROI for PMS, businesses should not overlook the intangible benefits and try to assign them a monetary value or a qualitative score. For example, they can use customer surveys, feedback, or reviews to measure customer satisfaction and loyalty, or employee surveys, retention rates, or performance indicators to measure employee satisfaction and productivity.

4 Mistake 4: Not using a consistent and realistic methodology

Another mistake is to use a inconsistent or unrealistic methodology to calculate ROI for PMS. For example, some businesses may use different time frames, discount rates, or assumptions for different scenarios or alternatives, which can skew the results and make them incomparable. Or they may use overly optimistic or pessimistic projections, which can inflate or deflate the expected benefits or costs of the PMS. To avoid these errors, businesses should use a consistent and realistic methodology that follows best practices and industry standards, such as the net present value (NPV), the internal rate of return (IRR), or the payback period. They should also use reliable data sources, validate their assumptions, and conduct sensitivity analysis to test the robustness of their results.

5 Mistake 5: Not reviewing and updating the ROI calculation

The final mistake is to treat the ROI calculation as a one-time exercise, and not review and update it regularly. The ROI of a PMS is not a static figure, but a dynamic one that can change over time due to various factors, such as market conditions, customer preferences, technological innovations, or operational challenges. Therefore, businesses should monitor and evaluate the performance of the PMS against the expected outcomes and adjust the ROI calculation accordingly. This way, they can track the actual value and impact of the PMS, identify any gaps or issues, and take corrective actions if needed.

6 Here’s what else to consider

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